Category: State Budget

Call it a last-minute clarification or a June surprise, another piece of bad news: A trailer bill that the Legislature will vote on Wednesday permits districts to slash the school year by an additional three weeks for the next two years, if voters reject Gov. Brown’s tax increase in November. That’s twice what Gov. Jerry Brown seemed to suggest in the May budget revise when he proposed the elimination of 15 days divided over a two-year period. Instead, the Legislature is prepared to authorize a 160-day year, likely the lowest in the nation and far behind other advanced nations; nearly all states have a 180-day year, which California also required before 2010.

In one sense, nothing has changed. Brown hasn’t suggested less funding for schools than the $53.6 billion for 2012-13 that the Legislature approved in passing the budget last week. Districts will have to negotiate a shorter year with their unions; they can’t declare it unilaterally, and most districts won’t go that low.

But the language in AB 1476 (section 50, midway through a very long bill) is a stark message that a defeat of the tax increase will create more than a one-year revenue crisis for schools.

Brown basically spared K-12 schools cuts in this year’s state budget but is promising to slash school funding by $5.5 billion if voters reject the income tax/sales tax increase. That translates to $441 per student, about an 8.4 percent cut in funding. Eliminating 15 days out of a minimum 175 days would be an 8.6 percent cut in the calendar. So cutting 7.5 days each of the next two years would solve only half of the gap, leaving districts to make other cuts through layoffs, benefits, or non-pay areas.

Lowering the minimum year to 160 days now would be too late for those districts and unions that already have negotiated potential cuts. Sacramento City Unified teachers earlier this month approved a two-day furlough, plus an additional 10 days, lowering the school year to 168 days, if the tax initiative fails.

A Senate staff member said that the intent of the trailer bill language is to give districts more flexibility to cope with terrible choices. Most districts won’t go to a 160-day year, but it will be an option. Because districts must submit balanced budgets for two years beyond the current year, districts can negotiate with certainty for continued furloughs through 2013-14. The governor approved the trailer bill language, which clears up any ambiguous reading of his earlier proposals, the staff member said.

But Robert Miyashiro, vice president of the education consulting firm School Services of California, said that the Legislature shaped the budget the way it is, so it is disingenuous to say, It is out of our hands. Legislators strategically set it up to say the schools must take a big cut if the initiative flops.

A spokesman for the California Teachers Association said that the union had not read the trailer bill language and could not comment. The trailer bill also contains language permitting teachers and other school employees to accrue a full year of vesting for pensions if a district’s school year drops to as few as 160 days.

Given more control over how they could spend state money, school districts not surprisingly chose survival over experimentation. And if legislators want otherwise – to encourage districts to innovate or target money on low-achieving students – then they should be more explicit about their intentions.

That was the main finding and chief recommendation of a study of districts’ flexible spending last year by the RAND Corporation and researchers with the University of California. The results are consistent with annual surveys by the Legislative Analyst’s Office the past two years.

The study – also a survey, of chief financial officers in 223 districts – diagnosed how districts spent their share of $4.5 billion in previously earmarked spending. That encompassed 40 of 60 categorical programs and slightly less than a quarter of the $19 billion in total restricted spending that the Legislature made flexible in 2009.

Longtime advocates of unloosing control from Sacramento had speculated that districts might use deregulated spending to “make focused investments in new instructional approaches to meet local needs” or push decision-making to the school site level. They wondered whether vocal, well-organized groups – educated parents or unions – would dominate control over spending, aggravating disparities in student spending.

But none of this happened to a great extent. (There is an interesting experiment on school-based budgeting in Los Angeles Unified and Twin Rivers Unified, which contributors to TOP-Ed have written about here and here.) Gov. Arnold Schwarzenegger cut categorical programs 20 percent in 2009 when instituting flexibility, and total K-12 spending has been cut 18 percent since 2007-08. As a result, districts “swept” restricted dollars into their general funds in order to keep solvent and prevent additional layoffs, the study found. Money that had been earmarked for teacher and staff training and for general school improvement was largely diverted. Adult education was cut severely in many districts that had the programs.

“Hopes of some advocates that local control would spur widespread innovation or a new focus on classroom improvements simply proved unrealistic,” the study’s co-author, Bruce Fuller, a co-director of the Policy Analysis for California Education (PACE), said in a news release.

However, the study also found that “about one-third (of districts) reported that aligning spending with ‘school improvement goals’ was a high priority, and a few reported allocating newly flexible dollars to instructional reforms.” The latter were mainly urban school districts.

Lost accountability

The study has implications moving forward. Gov. Jerry Brown has proposed shifting most categorical dollars, including the money already flexed, into a weighted student funding formula that would shift significant spending to low-income students and English learners. Brown’s proposal has run into opposition based on the distribution formula. But advocates for poor children also have called on Brown to include assurances that the extra dollars would be spent on them and that local parent and English learner school committees be given a role in overseeing the dollars. The groups, which included the Education Trust-West and Public Advocates, stated their position in a June 14 letter to Brown.

Another approach could be a block grant, in which districts have latitude to spend as they choose within parameters, such as designating money broadly for professional development. Assemblymember Julia Brownley, who chairs the Assembly Education Committee, took that approach in AB 18, a variation of a weighted student formula.

RAND and the LAO had to rely on district surveys, because the state didn’t force districts to report how they spent formerly restricted dollars. The RAND-UC report recommends that the state Department of Education require this and that legislators require that flexibility be evaluated to determine which students and which programs benefited and which did not. Among the questions worth asking:

“What happens to programs whose funds are most often swept up, such as art and music?”

“How do changes in adult education funding affect communities and other institutions providing such services?”

The Legislature’s budget package is missing many of Gov. Brown’s controversial education initiatives. A joint Senate and Assembly plan outlined yesterday protects transitional kindergarten, the science mandate, and the AVID program, rejects the weighted student funding formula, and offers districts a choice in how they’re paid for state mandates.

“This budget protects and invests in public education this year, and increases Proposition 98 funding by $17 billion over the next four years,” said Assembly Speaker John A. Pérez during a press conference Wednesday morning with Senate President pro Tem Darrell Steinberg.

The overall budget plan that lawmakers will vote on this Friday would erase California’s $20 billion structural deficit, balance the budget for each of the next three years, and create a $2 billion reserve by fiscal year 2015-16, according to Pérez and Steinberg.

Spending for K-12 education would be $53.6 billion for the 2012-13 fiscal year. That’s about $1 billion more than the governor had anticipated. Because the budget assumes more revenue for education through the passage of Brown’s tax initiative in November, the state is obligated under Proposition 98 to start paying off the “maintenance factor,” the IOUs given to schools during bad times. But if the tax increase fails, the Legislature and governor are in accord on the need for cuts of $5.5 billion for K-12 schools and community colleges. That would translate to a K-12 cut of $450 per student.

About $2.9 billion of that would come from lowering the Prop 98 guarantee due to a drop in state revenues. The rest would be made up through shifting two expenses into Prop 98 that are currently funded outside the guarantee. Those are repayment of general obligation bonds for school construction and the Early Start early education program. (Go here to read more about that in an earlier TOPed article.)

In addition, the legislative package would include trailer bill language allowing K-12 schools to cut 15 additional days from the next two school years.

Weighty issue

The governor’s biggest loss, for now, is the weighted student funding formula. Lawmakers’ refusal to include it in the budget isn’t an outright rejection of the concept of a simpler, fairer finance system that sends more money to districts with high proportions of English learners and indigent students. And Brown is expected to bring up the issue again this summer. But many lawmakers felt that the governor was jamming them to accept sweeping changes without justifying the basis for his formula, while legislators from suburban districts called for restoring all of the money lost to cuts over the past four years before redistributing new money.

Rick Simpson, the deputy chief of staff for Speaker Pérez, said that lawmakers wanted more assurances that the money under a weighted formula would actually reach targeted students. As part of his reform, Brown proposed giving districts total flexibility in deciding how the dollars would be spent. “If you’re going to deregulate the entire school finance system,” Simpson said, “and if you’re not going to regulate inputs, you ought to have an accountability system to make sure you get those positive outcomes. We have lots of disparate pieces that we refer to as accountability, but it’s not a system.”

High school science intact

Brown had proposed eliminating the mandate for more than two dozen K-12 programs, including (the most expensive) requiring schools to offer a second year of high school science. Dropping a mandate would mean that districts could continue offering a program by finding money in their existing budgets. Brown also proposed reimbursing districts a flat $28 per student for the remaining mandated programs.

Science teachers and the business community protested that the state shouldn’t retreat from its commitment to science education (see commentary on this page), and the Legislature agreed, keeping it and all of the current mandates intact. However, lawmakers didn’t increase the reimbursement rate either, so districts can expect to continue accumulating a big IOU for meeting the science mandate. The state has also gone to court, arguing that the $250 million cost on the books for offering a second year of science is way too high, based on a false assumption that high schools had to add a period to the day to accommodate it, according to Paul Golaszewski, an analyst with the Legislative Analyst’s Office.

Applying for a straight $28 per student would be the easiest, quickest way for districts to be reimbursed for mandated costs. However, the Legislature also would continue to allow districts to submit bills detailing the cost of complying with mandates – and hope that the state accepts the claims.

Starting early

The joint budget proposal allowed the early childhood education community to exhale a bit, by denying a number of significant cuts that the governor was seeking. He wanted to cut the reimbursement to preschool providers by 10 percent, raise the financial eligibility requirement, place a two-year cap on families receiving childcare services while attending a school or a job-training program, and eliminate full-day preschool starting next year.

“The Legislature has really stood up for young children,” said Scott Moore, Senior Policy Advisor at Preschool California. No one got away unscathed, however, and childcare will be taking a $50 million cut and losing 6,000 spaces for children in full-day state preschool, the childcare voucher program, and the infant-toddler child development program. That’s on top of a billion dollar reduction and 100,000 spaces lost since 2008. Still, said Moore, “it’s significantly less that we were fearing would be cut.”

This is the second of a two-part series on adult education in California. Click here to read part 1.

Adult education in California is nearly as old as the state itself. Today, the program that has helped millions of people learn English, earn a GED, and receive job training for 156 years is facing extinction. A new report released today by EdSource concludes that these schools, which provide second chances for the state’s most needy adults, “are as much at-risk as many of the people they serve.”

The report, aptly titled At Risk: Adult Schools in California, surveyed the state’s 30 largest school districts and found that 23 had made significant cuts to their adult education programs. In many cases, they lost at least half their funding. One of them, Anaheim Union High School District, shuttered its 73-year-old adult school.

“The important thing to remember is that these adult school programs are serving a population that really falls through the cracks,” said Louis Freedberg, Executive Director of EdSource. “This is a population that needs basic education in basic skills, that needs help with English as a Second Language, and for whom there is really no other place to go to get these basic services.”

These draconian cuts have taken place in just the past three years. Until 2009, adult education funding was protected as a categorical program, meaning districts could not use the money for any other purpose. But that February, faced with a massive budget shortfall, the Legislature and Gov. Brown removed 39 programs – including adult ed – from this restriction and gave school districts flexibility to use the funds wherever they were most needed.

A survey of several hundred school districts conducted by the adult education program in Montebello Unified School District found that about 40 have closed or are planning to shut their adult education programs, and estimated that, statewide, districts have redirected about 60 percent of the $773 million in adult education funds to the K-12 system. At the same time, enrollment dropped from 1.2 million students to about 700,000.

“We were actually growing before the cuts started,” said Pam Garramone, principal of Sonoma Valley Adult School, which closes at the end of this month. Garramone said there were six adult school agencies in Sonoma County before flex started; now there’s only one, Petaluma, and it doesn’t have the capacity to accommodate the 10,000 people who have been shut out.

Garramone said her district has always been very supportive of adult education, but was placed in an untenable position. “Our budget situation was just so drastic that every single thing that was on the list to be cut was painful for them, and they’re looking at even more cuts next year, so the decision to finally close adult education they just felt had to be made,” she said. “And I really don’t blame them; I didn’t necessarily agree with it, but I certainly don’t blame them for the decision.”

She blames the Legislature. Adult education should never have been flexed, said Garramone. Even though categorical flex is supposed to end on June 30, 2015, few people expect to see the money again. Indeed, Gov. Brown’s proposal for a weighted student funding formula would make categorical flexibility permanent.

Paul Hay, the superintendent of San Jose’s Metropolitan Education District (MetroED), told EdSource if weighted student funding is approved, “adult education is dead, gone, over, and will never come back in the state.”

MetroED’s enrollment plunged from 10,000 to 2,000 after it closed more than 50 programs, two major campuses, and all its community outreach centers except for a program for disabled adults.

Societal impact

The adult education program in Oakland Unified School District was among the hardest hit without being closed. It has been cut by more than 90 percent since the start of flex, losing $11 million of a $12 million budget which necessitated shutting two campuses and canceling English as a second language courses as well as its high school credit recovery program. The GED classes are still thriving, however, and graduated 95 students last year.

“When we were cut our numbers were at the highest they’ve been, this would have been our best year ever,” said Chris Nelson, director of the district’s adult education programs and president of the California Council for Adult Education. “It’s ironic now that the economy is so bad because it’s during times of high unemployment that people seek education programs.”

Donita McKay is studying for her GED and taking a computer literacy course through Oakland’s adult education school. McKay is 49 years old, a single mom with four children, and a ninth-grade drop out. She said being back in school has opened her mind and given her a different outlook on life.

“Education is important because when you don’t have it you’re so limited,” said McKay. “I always tell my children, get your education, because I didn’t really get all mine, so and you see where I’m at. They hear that from my mouth everyday.”

Sitting at small workstation in an RV retrofitted as mobile computer classroom, McKay said she’s considering becoming a teacher one day, “because I always like to give back and give what I learned, because it reminds me I used to be like that.”

Oakland has all the challenges of any big city. English is not the first language for about 40 percent of the population and in some neighborhoods the high school dropout rate is a staggering 60 to 70 percent, said Mayor Jean Quan, who spent twelve years on the local school board.

Oakland Mayor Jean Quan (Click to enlarge).

“What I really worry about is California creating a permanent underclass,” said Quan. “This is one of the ways out; this is one of the second chances that people have, and if people don’t have at least a high school degree it’s very hard to even get a good paying blue-collar job.”

Not dead yet

Gordon Jackson is head of the Adult Education Division of the California Department of Education. He said the mission of adult education is to advance the “economic, workforce development and societal goals by preparing adult learners for college, career and civic responsibility.”

It’s a critical goal, but one that doesn’t have critical support. Although adult education programs are run by both K-12 school districts and community colleges, it’s not the core mission of either. So, it’s taken some time for advocates to organize, but they’ve started considering alternatives on a number of fronts.

Several proposals are being floated said EdSource’s Freedberg. One idea is to combine resources and establish regional centers. Another, put forth by the state’s Little Hoover Commission, recommends turning over responsibility for adult education to community college; even thought they

are facing their own massive budget cuts. And a third plan, already underway, is to lobby the Legislature to remove adult education from categorical flex and from the governor’s weighted student funding formula.

“There are times when I would like to sit next to somebody at Starbucks and moan and groan and say I cannot believe that there are adults in this world of ours at the legislative level and other places who don’t really understand what it means to demolish an infrastructure, what it means to do this to California’s future,” said Jackson. “I can bemoan that and have a really intense pity party for a while, until I need to focus on what needs to happen.”

This is the first of two articles on the state of adult education in California. The second piece will run on Wednesday, June 13.

The sun was still melting through the gray morning sky as teacher Don Curtis rode his bicycle into a warehouse yard belonging to Oakland Unified School District, opened a large garage door, and backed his classroom into the parking lot.

The mobile classroom parked at West Oakland Middle School. (click to enlarge)

“It has taken some getting used to driving this vehicle, trust me. The big thing is the back end; when you turn, the back end swings out quite a ways,” said Curtis. But after eight years, he’s had plenty of practice driving the district’s 35-foot-long RV retrofitted with 12 computer workstations and a large screen for projecting lessons.

The mobile classroom, run by the school district’s adult education program, fills several spaces on a busy street next to Oakland’s Urban Promise Academy Middle School. It’s also full on the inside, with nearly two dozen parents of Promise Academy students sitting snugly on chairs and stools in order to buddy up at the workstations, while Curtis teaches them the basics of computer literacy: setting up email, doing a simple web search, and navigating the parent information section of the district’s website.

On the sides and front of the RV, painted in multicolored letters,is asign reading “Sharing English Together.” But that tag line is archaic. Despite the high-tech equipment inside, the RV is emblematic of a threatened species, a relic of Oakland’s once thriving adult education program.

The district’s program no longer offers English as a Second Language. It has also cancelled basic skills classes for adults who left school very young, often to work, and, at the other end, has dropped a high school diploma program for students who are a few credits shy of completion. A popular certified nursing assistant program is down to two sessions instead of seven, and two of the three schools have been closed.

“It’s been a year since the two campuses have closed. But we’re still getting calls asking if people can get their high school diploma,” said Chris Nelson, director of Oakland’s adult education program and president of the California Council for Adult Education (CCAE). “It’s heartbreaking to have to cut these classes knowing how much the community needs them.”

Flexibility breeds contretemps

Until 2009, adult education was protected as a categorical program in California, meaning the money couldn’t be used for any other purpose. In February of that year, state legislators gave school districts permission to use funds from 39 categorical programs – including adult education – wherever they were most needed, and cut the budget for those programs by 20 percent.

What districts did with categorical flex. (Source: California Legislative Analyst) Click to enlarge.

Since then, local school boards have closed 32 adult education programs and cut at least half the funding for more than 40 others, according to a survey conducted a few months ago by the adult education administrators in Montebello Unified School District. Later this week, EdSource will be releasing a new report and survey of how this categorical flexibility, or “flex” as it’s described, threatens to dismantle the nation’s oldest adult education program.

Chris Nelson is director of Adult Ed in Oakland Unified School District and president of the California Council for Adult Education. (Click to enlarge)

Oakland’s program was among the hardest hit, losing 90 percent of its funding. In the past three years, it’s dropped from $11.4 million to $1 million. During that same period, said Nelson, enrollment fell from 25,000 to 1,000 students, and all but a handful of the 300 teachers and staff members were laid off.

Adult education in California started in 1856, when the San Francisco Board of Education sponsored evening classes in elementary and vocational education in the basement of St. Mary’s Cathedral, according to the 2005 book Meeting the Challenge: A History of Adult Education in California, published by the state Department of Education.

Nelson is exasperated when he considers how far the program has come, only to now face being done in by a budget deficit. “Adult education has survived the Civil War, two world wars, and the Great Depression,” he said. “I believe that adult education can move forward; it should be able to.”

Get on the bus

Edgar Melchor first saw the mobile classroom when he brought his son to school. He has two children in the district and works at Whole Foods, the high-end grocery chain. Melchor said even though most of his work involves computers, his skills weren’t very good. He has a computer at home that his children use, but as far as he was concerned it was just a decoration – until he enrolled in Curtis’ class. The class runs four days a week, it’s free, and there’s childcare in the middle school for parents with younger kids.

“It helps me communicate better with [my children], because kids know a language we don’t know, the language of computers, and now I understand it,” said Melchor. “I help them every day with homework now.” And when he’s stumped, he emails Curtis.

“That’s part of the beauty of family literacy, that the kids see that their parents are taking these classes,” said Curtis. “I think it’s a huge impact for children to see their parents studying; it’s like trickle down, I would liken it to.”

The class has also given Melchor the confidence to apply for a better position at work, and he plans to enroll in a GED course. So it troubles him that the program has been cut so drastically. Every day he sees parents trying to sign up for the class, but they’re turned away because it’s already packed. “We should do something, we should come up with some funds to support this,” said Melchor. “You can see that we don’t need that much. We are here in a trailer; I don’t think we need that much to learn.”

Creating lifelong learners

GED teacher Carolyn Chin (click to enlarge)

The district’s GED program is held in what’s known as a permanent portable classroom. It doesn’t travel, but on a spring morning it was shuddering as work crews pounded away at a nearby construction site. The noise didn’t seem to distract any of Carolyn Chin’s two dozen students as they practiced mathematical word problems.

Chin is fervent about her work. Last summer, when it wasn’t clear whether she’d have a job in the fall, she held the class anyway, arranging to use her regular classroom. “My students wanted to maintain their momentum, so I wanted to make that happen for them,” she explained modestly. Her students are so loyal, they can’t seem to stop coming, even when they’ve completed the class.

Florence Edwards already passed the GED exam, took the certified nursing assistant class, works full time, and has enrolled in a nursing program at Merritt College for the fall semester. None of that has kept the recently naturalized immigrant from Ghana from showing up regularly in Chin’s class. “I always come here on my break time, I come here to refresh my mind,” said Edwards.

Florence Edwards earned a GED and nursing assistant certificate and is pursuing a degree in nursing. (click to enlarge)

Roberto Perez can’t stop smiling as he talks about graduating from the GED class later this month. “I couldn’t believe it,” he gushed. “When I first came here, I came to try, but I never think I’m going to make it and it was a big surprise when I got my scores and it said I passed; and I jumping and I still can’t believe it!”

Roberto Perez in Carolyn Chin's GED class. (Click to enlarge)

Perez is a cook in an Italian restaurant in San Francisco and will study to become a chef next September at City College of San Francisco. But his future was uncertain at the end of the last academic year when all the teachers were laid off shortly after he started in Chin’s class. His nightmare was that the district would stop offering GED courses. “Now I’m going to say keep this open, the GED, because I think everybody deserves a second chance,” said Perez.

A lot of people in Oakland need second chances. About 30 percent of the adult population are considered functionally illiterate and 21 percent don’t have high school diplomas – higher in some neighborhoods. None of this is lost on the school district, but its primary mission is K-12 education and those schools have been cut so much that there was little question about appropriating the flex funds.

“These are tough decisions in terms of which programs need to be reduced, schools to close, so that we can actually function, deliver a quality program for all of the students and also be fiscally solvent,” explained Deputy Superintendent Maria Santos, who oversees adult education in Oakland Unified School District.

She acknowledged that those decisions aren’t made in a political vacuum. “Ithink some of the critical considerations that come to mind are what we’re held accountable for,” said Santos. That means ensuring that students improve their scores on statewide achievement tests, that they meet academic standards and increase their graduation rates.

The district is hoping to offset some of the cuts to adult education by developing partnerships with local community organizations and community colleges, funding ESL classes through a different categorical account, and making sure that alternative programs like continuation schools are utilized to their fullest.

Santos was calm, even impassive while discussing the situation, as though she’d heard and said it all many times before. But at the end of the conversation, she stood up, rapped her knuckles on the conference table in her office, and conceded, “These are tough decisions; there are no good decisions when it comes to money.”

A Superior Court judge last week lopped a limb off Proposition 98. Fans of Monty Python might have been amused; school districts will not be.

The three-paragraph rulingby San Francisco Superior Court Judge Harold Kahn simply reaffirmed a tentative ruling he issued in March. Back then he ruled that nothing prevents the governor and Legislature from shifting money out of the General Fund, even if that in turn leads to less funding for K-12 schools and community colleges under Proposition 98, the law setting minimum funding for schools.

The loss is significant. As part of the 2011-12 state budget, Gov. Jerry Brown transferred about $5 billion in sales tax and vehicle license fee revenues to a special fund as part of his shifting of state safety and social services to counties and cities. Had the money stayed in the General Fund, roughly 40 percent, or $2.1 billion, would have gone to the Proposition 98 guarantee.

The California School Boards Association, the Association of California School Administrators, and three school districts sued, claiming that was an illegal diversion of money owed schools. Their attorneys argued that voters passed Proposition 98 in 1988 to prevent manipulation of minimum dollars owed schools. Legislators could suspend the minimum obligation with a two-thirds vote, while acknowledging that the money owed had to be restored over time. They didn’t do this. Or, if they still wanted to set up a special fund outside of the General Fund, they could pay a higher percentage to schools of a diminished General Fund. Lawmakers didn’t do this either.

Kahn didn’t put enough in writing to fathom his thinking, but during oral arguments in March he implied that if drafters of Prop 98 had wanted to prevent the siphoning of money through special funds, they would have put it into the initiative. Lawyers for the plaintiffs argued that the intent of voters was clear: a minimum funding level that shouldn’t be tampered with.

ACSA and the CSBA haven’t decided whether to appeal Kahn’s ruling. Superior Court decisions are not cited by other courts as precedent-setting decisions, so there’s always a gamble going to the Court of Appeals. Meanwhile, Brown plans further tampering with Prop 98 if his tax initiative fails in November. He is proposing to stuff $2.6 billion in school construction bond payments, which had been funded as part of the non-Prop-98 part of the General Fund, into Prop 98. In effect, that would create a cut in funding for schools.

Though the circumstances are different, Kahn’s ruling will encourage these types of manipulations.

Voters remain up in the air about passing a statewide tax to help schools, according to recent polls. But given a chance to support local schools exclusively, more than two-thirds of voters in nine school districts said yes – a wide enough margin to pass a parcel tax. Even the four parcel taxes that lost got over 60 percent support and would have passed had the threshold for passage been 55 percent – an idea that’s been kicking around for years but can’t get out of the Legislature for lack of Republican votes. *

Also in Tuesday’s primary, voters in 23 K-12 districts passed nearly $2 billion worth of school construction bonds, a strong commitment in uncertain times. A piece of that money in some districts will go toward upgrading technology, critical as districts move toward implementing Common Core standards with digital textbooks and computer-administered assessments. Bond measures in an additional 11 districts were rejected, although a few came tantalizingly close to the 55 percent needed for approving school bonds.

For 2012, 13 of 18 parcel taxes have passed; that’s 72 percent, which is higher than the historical passage rate of 58 percent. Among the losers on Tuesday were a $54, four-year parcel tax in Santa Barbara, which would have replaced a $50 tax due to expire next year, and a parcel tax in West Contra Costa Unified based on a home’s size – 10.2 cents per square foot. But voters there can get another chance, if the school board is inclined, since the existing 7.2 cents per square foot won’t expire for two years.

Parcel taxes are one of the few ways that school districts can raise money. They’re predominately found in high-cost Northern California, especially the half-dozen counties in the Bay Area, with a smattering in wealthy districts around Los Angeles. Most parcel taxes are under $100, especially initial parcel taxes. Theexceptionson Tuesday were an eight-year, $458 tax in Ross Valley School District in Marin County, replacing a $309 parcel tax, and a $123, eight-year tax for elementary and high schools in Santa Cruz; it passed with more than 80 percent of the vote.

Because of the passage of Proposition 13, parcel taxes cannot be based on a property’s value. Because McMansions, cottages, and office buildings are all charged the same, parcel taxes are regressive, unrelated to an ability to pay. So it’s ironic that both tax initiatives on the November ballot, which would raise money by raising the graduated income tax (Gov. Jerry Brown’s would also include a ¼ cent increase in the sales tax) are doing far worse than the parcel taxes and bond measures. Attorney Molly Munger’s Our Children, Our Future tax would send money directly to schools – essentially what parcel taxes do – though that feature is not widely known.

Voters favor local control with their money, which appears to be why parcel taxes, for all their faults and limited geographical range, continue to do well.

* Thanks to Mike McMahon, school consultant and trustee of the Alameda Unified School District, who tracks historic and current information on parcel taxes and other school data.

More California school districts than ever before are heading toward insolvency. The State Department of Education’s Second Interim Status Report for 2011-12, released yesterday, named 188 districts with serious financial problems; of those, 12 have negative certifications, meaning they won’t be able to meet payroll and other bills for this academic year.

California schools that may not be able to make ends meet. (Source: State Dept. of Education) Click to enlarge.

It’s a steep increase over the first interim report, released last February, which we wrote about here. At that time, there were seven districts on the negative list and 120 in qualified status. With the increases, more than 2.6 million of California’s 6.2 million school children attend schools facing uncertain financial futures.

“This is the kind of record no one wants to set. Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools’ lights on, their bills paid, and their doors open,” said State Superintendent of Public Instruction Tom Torlakson in a written statement. “The deep cuts this budget crisis has forced — and the uncertainties about what lies ahead — are taking an unprecedented and unacceptable toll on our schools.”

Given the years of budget cuts to education, the new numbers didn’t come as a surprise to school finance officials, said Mike Hulsizer, head of governmental affairs for the Kern County Office of Education. But it will get worse if neither of the school tax initiatives passes next November. “There is no question that this understates the risk that districts are facing,” said Hulsizer, because many of the districts counted on funds from Gov. Jerry Brown’s tax increase in planning their 2012-13 budgets.

K-12 schools would receive an extra $2.8 billion if the initiative passes, but Brown is proposing cutting K-12 schools about $5 billion – $441 per student – midyear if it fails. Districts weren’t ordered to budget one way or another. Although some county superintendents wanted schools to budget for the worst-case scenario, others told school districts to plan either way, but make sure they have a Plan B in case of a negative vote at the ballot box. “The county’s position is that a district needs to be able to weather the trigger if it does happen,” said Santa Clara County Office of Education Superintendent Chuck Weis. “If a district is already on the edge, then plan for the worst.”

Joel Montero, CEO of the state’s Fiscal Crisis Management and Assistance Team (FCMAT), told a state Assembly committee two weeks ago that small and rural districts face the largest impact from another round of midyear cuts. “Small and tiny rural districts don’t really have an economy of scale,” said Montero. They don’t have enough money or students to absorb any additional losses, particularly when those losses come in the form of deferrals, the $9 billion-plus that the state owes to school districts.

Options for school districts that have run out of options. (Source: Leg. Analyst) Click to enlarge.

“So the decision that you have to make as a school district is whether or not you can afford to fund that deferral for the term and if you can’t then it becomes a cut for you in a way,” Montero explained to subcommittee members.

Five of the nine districts that received a negative certification fall into the small and/or rural category. The tiniest, La Grange Elementary School District in Stanislaus County, will be shutting down at the end of this school year and sending its six students to other districts.

Two of the districts, Vallejo City Unified and South Monterey Joint Union High School, have already been bailed out by the state and are under a state-appointed administrator. Linda Grundhoffer, the Chief Business Official in South Monterey – formerly King City Joint Union High School District – said ever since the district went under state control in 2009 the onslaught of budget cuts “are just making it harder for this district to recover.” The district is seeking to lower the interest rate on its state loan from 5.44 percent to 1 percent through legislation, but so far Senate bill 1240and Assembly bill 1858 are on the suspense files in the appropriations committees of their respective houses.

In an unusual twist, this year’s negative list also contains a small but very wealthy district. At a little over $170,000, the median household income in the San Mateo County foothills community of Portola Valley is nearly three times the state average. But the district is now trying to stave off a state takeover after an audit found a shortfall of about $850,000 for this school year plus an additional half-million dollars allegedly misappropriated by the former superintendent, who’s already facing felony charges stemming from his tenure as chief financial officer in the neighboring Woodside Elementary District.

The list of districts on the negative and qualified lists may continue to set somber new records depending on what happens in November. “Second interim certifications are assuming a better budget environment than realistically may be there after November,” FCMAT’s Montero told TOPed. “Without that assumption, it is likely the numbers of qualified and negative districts would have been higher.”

The state PTA backs the tax initiative financed by civil rights attorney Molly Munger; the California Teachers Association and the Association of California School Administrators endorsed the governor’s initiative. This week, the California School Boards Association decided to support both.

On Sunday, at the urging of CSBA’s board of directors, school board members in the Delegate Assembly voted 129-79 to encourage their constituents to vote for both tax proposals that will appear on the November ballot. They did so after an hour-and-a-half debate and after defeating, by voice vote, an amendment calling for CSBA to support only Munger’s “Our Children, Our Future” initiative. There was no motion to support only “The Schools and Local Public Protection Act of 2012,” which Gov. Jerry Brown and the California Federation of Teachers are sponsoring.

“We are facing a nuclear winter for funding for public education,” said CSBA Vice President Josephine Lucey, a school board member from Cupertino. “Districts cannot absorb more cuts and provide a decent education.” Delegates decided it was smartest to back both initiatives, Lucey said, after concluding, “Why should we be fodder for a fight” between the two tax campaigns or the anti-tax Howard Jarvis Taxpayers Association, which would play up its opposition to one of the tax plans.

Brown’s tax plan was favored by a slight majority, 54 percent, in a poll last month by the Public Policy Institute of California, while Munger’s drew only 40 percent support in that voter survey. But Munger’s plan would provide substantially more money for K-12 schools, so it came down to a difference between “the purists and the pragmatists,” said Frank Biehl, president of the East Side Union High School District school board and a delegate from Santa Clara County. “One side said Munger’s would bring more money for a longer time with more flexibility. The other side said, ‘It’s not going to pass so what difference doe it make?'”

Biehl, who plans to vote for both, said another factor was that the CSBA didn’t want to cut off dialogue with Brown, who has met with the board of directors and responded to their concerns, such as changing his plan for a weighted student formula.

Both initiatives are expected to qualify for the ballot. Brown’s tax plan would raise between $6.5 billion and $9 billion by raising the sales tax ¼ percent for four years and the personal income tax between 1 and 3 percent for seven years on those earning more than $250,000. But most of the money would go toward shoring up the General Fund, with $2.9 billion going toward Proposition 98 next year; Brown would commit that to repay part of $9 billion in deferrals, late payments to school districts.

Munger’s initiative would raise $5 billion in 2012-13 and then $10 billion for 11 years by raising the state’s progressive personal income tax less than a half-percent for lowest earners up to 2.2 percent for those earning more than $2.5 million. In the first three years, her plan would pay off $3 billion in state bonds, freeing up money for the General Fund, with the rest going toward K-12 schools and early childhood education. After that, all of the money would go directly to schools, on a per-student basis, and early childhood programs.

If, against the odds, Munger’s initiative won and the governor’s lost, the Legislature could undermine it by separately manipulating the General Fund to decrease Proposition 98 funding for education. Brown and lawmakers have become adept at that. There would be disputes if both initiatives passed. The one with the highest vote total would determine which clauses applied in areas of overlap (the rates on the personal income tax); the courts would likely be called on to sort through other issues.

In its press release on Sunday’s vote, CSBA made a strenuous case for more school funding while expressing little enthusiasm for Brown’s initiative. Quoting CSBA Executive Director Vernon Billy, it said, “CSBA opted for the dual endorsement because schools desperately need funding.” Yet, he and the CSBA leadership want to make it clear to the public that the governor’s initiative does not provide new funding for schools. Instead, it bolsters the General Fund with new revenue.

“‘Under the governor’s plan, schools would get back some of the billions of dollars that were redirected away from them and used to shore up the state’s funding gap in the last budgetary cycle. The governor’s initiative only restores some of the funds already owed to schools,’” Billy said.

The Legislative Analyst’s Office is suggesting an alternative to the massive cut to K-12 schools and community colleges that Gov. Jerry Brown is proposing if his tax initiative fails in November. Instead of a real spending cut of $2.8 billion, or $415 per K-12 student, districts and community colleges would be cut $1 billion, or only $162 per K-12 student, under the LAO plan.

The LAO detailed its alternative in an analysis of Brown’s May budget revision, which the nonpartisan, independent agency released on Friday (see pages 21-22 in the pdf version). The difference is the size of the Proposition 98 spending obligation that is calculated for this year and next year, separate from the tax increase.

The LAO assumes a more conservative approach, which would leave the K-12 schools and community colleges with $1.7 billion less than the governor has calculated and that districts will argue they are owed; that’s the downside for districts. The paradoxical upside is that, without a higher Proposition 98 base, they would feel less pain if the tax increase failed. Since most school districts are budgeting assuming the worst case, they could plan now for a smaller cut in the LAO proposal.

Brown is also proposing a new, major manipulation of Proposition 98, with long-term implications to school funding, if the tax increase fails – a scheme that the LAO alternative would avoid.

For districts, it comes down to which bitter pill to swallow.

Proposition 98 was written so that schools receive significant increases when the economy is good and personal incomes throughout the state are rising. When the economy slows, IOUs to schools and community colleges accumulate; the sum is known as the maintenance factor, and, over the past four years, it’s become big – about $10 billion, or 20 percent of the Proposition 98 obligation (see this explanation).

The repayment of debt owed to schools is based on the change from year to year in state revenues. Usually, the change reflects an economic recovery. Not this year. Revenues have deteriorated, regardless of the projected increase from 2011-12 to 2012-13. The LAO argues that Brown is calculating the maintenance factor as if it were a good year, technically known as a Test 2 year under Prop 98. When it’s a bad year, known as Test 1, with K-12 and community colleges getting a set percentage of a shrunken budget – about 40 percent – there’s no obligation to calculate the maintenance factor at the expense of other parts of the budget, the LAO argues. (This point has never been litigated. But John Mockler, the author of Proposition 98 and and adviser to the California Teachers Association, says that the LAO is wrong: The law does not distinguish between Test 1 and Test 2 years in terms of repayment; nothing under the law lets the state off the hook.)

The $1.7 billion savings that the LAO envisions includes a $500 million maintenance factor repayment this year and $1.2 billion in 2012-13, under Brown’s budget. Brown is proposing to use a chunk of it to speed up repayment of deferrals, the chronically late state payments that have forced cash-strapped districts to borrow short-term money. Since Brown’s not proposing to increase programmatic spending for schools anyway, school operations won’t be affected next year by not receiving the maintenance factor, the LAO says. However, Brown and the Legislature will be able to spend the $1.7 billion on other areas of the state budget that are hurting.

Cramming more into Prop 98

Now shift to November. Brown is proposing to raise the sales tax 1/4 percentage point and the income tax on the wealthy between 1 and 3 percentage points, and he has built his budget assuming the increase would pass. If it fails, he would cut K-12 schools and community colleges $5.5 billion: 90 percent of the total $6.1 billion cut.

About half of the $5.5 billion cut would be the postponement of repaying deferrals. The LAO and Brown agree this would be necessary. But Brown would then cut $2.8 billion in real dollars to schools by further manipulating the Prop 98 formula. He would shift $2.8 billion of expenses that had been funded outside of Prop 98 into it, forcing a corresponding cut to per-student funding. The two expenses are repayment of state bonds for school construction ($2.6 billion) and the Early Start early education program ($238 million).

The tactic of moving items in and out of Prop 98 is called rebenching. There are two ways to do this, and Brown is using both as it suits him, a “heads I win, tails you (schools) lose” approach. As the LAO diplomatically notes, “Using different rebenching methods within the same budget plan (as well as changing rebenching methods across years) at least creates the perception that the state likely is selecting the method that always works to its maximum benefit.” (Go here for an explanation of a lawsuit brought by education groups against Brown over rebenching in last year’s budget.)

By excluding the $1.7 billion maintenance factor and lowering the Prop 98 obligation for 2012-13, the LAO would not require as big a cut or the Prop 98 deception. (The LAO also recommends cutting $100 million in disputed money for the Quality Education Investment Act, a program for low-performing schools championed by the California Teachers Assn.)

All of this is dense stuff that is nearly indecipherable. It offers further evidence for the failure of how California finances state government and schools in particular.

But which method of calculating Prop 98 has consequences? On the one hand, it will determine whether districts get $1.7 billion owed them next year or later; on the other, it will determine whether, failing passage of a tax increase, schools face a cut of $415 or $162 per student; the $253 difference is equal to almost two weeks of school.

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Welcome to the NEW TOP-Ed!

After a brief hiatus, SVEF’s education blog, Thoughts on Public Education (TOP-Ed), is back in a new format. The blog will focus on deep analysis of education issues, especially as they relate to Science, Technology, Engineering, and Mathematics (STEM). These entries will attempt to translate complex education topics for readers as well as invite bloggers representing different perspectives to respond to our entries. We will also invite guest contributors to share their ideas about education along the way. We invite you to stay tuned to the new TOP-Ed.

We thank journalists John Fensterwald and Kathryn Baron for their work on TOP-Ed over the past three years. Their tireless efforts have successfully established TOP-Ed as a forum to present and discuss key education issues of the day. We wish them the best of luck continuing their excellent brand of journalism at EdSource and encourage you to keep up with them at edsource.org.